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On March 5, the Supreme Court is scheduled to hear oral arguments in a case that could take away a 30-year-old right that Americans have come to rely on.

If the controversial oil-services company Halliburton(NYSE:HAL) has its way, then small investors may soon lose one of their most potent weapons against corporate fraud: the ability to file class-action lawsuits under the Securities Exchange Act of 1934.

At the end of last year, the U.S. Supreme Court agreed to hear Halliburton's appeal in a class-action case brought by investors against it and CEO David Lesar for "knowingly or severely recklessly misleading" the public more than a decade ago about the company's liability for asbestos claims.

Indeed, it's no exaggeration to say that the very existence of securities fraud class actions hinges almost entirely on the outcome of this case.

The facts of the caseThe facts involve statements made by Halliburton in 2001 about the extent of exposure to asbestos litigation assumed in its acquisition of Dresser Industries.

In January of that year, the company reported that "prospective asbestos liabilities ... should have minimal adverse impact on the company going forward." In August, it claimed that "asbestos exposure concerns appear to be overblown." And in November, it stated that "open asbestos claims will be resolved without a material adverse effect on our financial position or the results of operations."

Yet less than a month after the last statement, Halliburton was hit with a $30 million asbestos verdict, causing investors to lose faith in the company's assurances and fear the worst. Shares in the oil services company proceeded to plummet, dropping by 42.7% on the day of the announcement.

The current class-action lawsuit was filed on behalf of investors soon thereafter and has made its way through various courts ever since.

A critical legal wrinkleThe specific issue before the Supreme Court is a nuanced one. Halliburton isn't simply professing its innocence or asking the justices to hold that it didn't mislead investors. Instead, it's moving the court to bar plaintiffs from litigating the case as a class action as opposed to separate lawsuits.

On the surface, this doesn't seem like a big deal. Who cares if investors have to sue Halliburton individually as opposed to as a class? What difference does it make to people who didn't own Halliburton stock when the alleged misrepresentations took place?

The answer is that it makes a huge difference.

This is because Halliburton is asking the court to overturn a legal doctrine known as the "fraud on the market" theory, which creates a rebuttable presumption that investors rely on statements of material fact made publicly by corporate executives. Without this presumption, securities fraud cases would be far too complicated to litigate as class actions, leaving individual investors to fend for themselves against deep-pocketed corporations.

The implications of this would be considerable. Most importantly, for nearly three decades, the securities laws have been predicated on both public and private enforcement -- the former by the SEC and Justice Department and the latter by private class-action lawsuits. Without the latter, in turn, the market would lose a critical overseer and, one can only assume, be far more susceptible to deceit.